Tuesday, September 6, 2011

Cost-Cutting Wasn’t Enough at Yahoo

Yahoo fired CEO Carol Bartz today. The company was happy enough with Bartz’s aggressive cost-cutting which saw her shut down more than half of the company in just two years, but not so happy with the accompanying decline in revenue. It worried too about the loss of its identity as Bartz attempted to turn the web site into AOL Lite. It was a curious strategy that the company is just starting to recover from. The story shows that cost-cutting by itself, even if done with a high degree of skill, can turn into a kind of quagmire.